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One-shot cures for diseases are not great for business—more specifically, they’re bad for longterm profits—Goldman Sachs analysts noted in an April 10 report for biotech clients, first reported by CNBC.

The investment banks’ report, titled “The Genome Revolution,” asks clients the touchy question: “Is curing patients a sustainable business model?” The answer may be “no,” according to follow-up information provided.

Analyst Salveen Richter and colleagues laid it out:

The potential to deliver “one shot cures” is one of the most attractive aspects of gene therapy, genetically engineered cell therapy, and gene editing. However, such treatments offer a very different outlook with regard to recurring revenue versus chronic therapies... While this proposition carries tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow.

For a real-world example, they pointed to Gilead Sciences, which markets treatments for hepatitis C that have cure rates exceeding 90 percent. In 2015, the company’s hepatitis C treatment sales peaked at $12.5 billion. But as more people were cured and there were fewer infected individuals to spread the disease, sales began to languish. Goldman Sachs analysts estimate that the treatments will bring in less than $4 billion this year.

“[Gilead]’s rapid rise and fall of its hepatitis C franchise highlights one of the dynamics of an effective drug that permanently cures a disease, resulting in a gradual exhaustion of the prevalent pool of patients,” the analysts wrote. The report noted that diseases such as common cancers—where the “incident pool remains stable”—are less risky for business.

To get around the sustainability issue overall, the report suggests that biotech companies focus on diseases or conditions that seem to be becoming more common and/or are already high-incidence. It also suggests that companies be innovative and constantly expanding their portfolio of treatments. This can “offset the declining revenue trajectory of prior assets." Lastly, it hints that, as such cures come to fruition, they could open up more investment opportunities in treatments for “disease of aging.”

Ars reached out to Goldman Sachs, which confirmed the content of the report but declined to comment.

The ones that are in the business of making people healthy don't want them to be too healthy, because then they can't make money. They want to make "treatments" which you have to take indefinitely, not "cures".

This is why healthcare should be funded in by taxpayers and public institutions... because private companies that try will be digging their own grave since it's financially unsustainable. It's an area that (pure) capitalism just doesn't work.

Sadly, this has always been the way of it. Have a drug that looks like it will care a rare, but ultimately debilitating disease? It's likely not financially viable. Saw it a number of times in my days in Big Pharma.

Sadly, I don't think the insurance market is the culprit, here. Single Payer won't make these kinds of drugs viable, even if it would make them affordable.

My word. It's like they admitted that the market doesn't actually enable good outcomes in some cases. Almost as if different approaches are needed in different situations rather than blindly hewing to some thrice damned ideology, liberal or conservative.

All those darn "cures" getting in the way of 'treatments' that never end.

Goldman and manyother publicly owned companies don't get that the whole point of biotech/pharma is to cure diseases or if that isn't possible yet to treat the disease. Though money and demanding shareholders makes them lose focus

"Solution 3: Constant innovation and portfolio expansion: There are hundreds of inherited retinal diseases (genetics forms of blindness) … Pace of innovation will also play a role as future programs can offset the declining revenue trajectory of prior assets.""

Umm...So the reason that their sales dropped had nothing to do with three competing products with even better cure rates and lower cost being released since then? Nothing to do with PBMs negotiating better pricing with those competitors instead?

I think this is one of the realities of the world. No shit sherlock is probably the most appropriate response to this article. While socializing biotechnology and medicine seems like a good idea, I don't know of any data about its track record of innovation and progress (though I'm happy to see any analysis folks can link to).

Still, I think Biden's idea of a cancer cure by using massive amounts of government money isn't a bad idea. It's similar to the space race. We went to the moon so we could flex our balls in front of Russia, not because we thought that we were going to turn a buck. Perhaps Nasa did it way more inefficiently than a private company could, but they did it and it achieved its desired effect.

Seriously, it's time to bring back burning at the stake in the public square.

It's his or her job to answer that question. Somebody asked "is curing disease a sustainable business model?", and the business analyst apparently answered "no".

They weren't asked whether it was worthwhile to society, or whether it was "the right thing to do", or whatever. They were asked if it was a good way to make money, and they provided their professional analysis. That's what their job is.

If you want to ask about the worth to society, go ask somebody whose job it is to try to quantify that. If you want to know if it's "right", go ask your preferred flavor of priest or bowl of flying monstrous spaghetti.

I think this is one of the realities of the world. No shit sherlock is probably the most appropriate response to this article. While socializing biotechnology and medicine seems like a good idea, I don't know of any data about its track record of innovation and progress (though I'm happy to see any analysis folks can link to).

Still, I think Biden's idea of a cancer cure by using massive amounts of government money isn't a bad idea. It's similar to the space race. We went to the moon so we could flex our balls in front of Russia, not because we thought that we were going to turn a buck. Perhaps Nasa did it way more inefficiently than a private company could, but they did it and it achieved its desired effect.

There seems to be plenty of pharmaceutical innovation in nations with nationalized health care. Viagra, just to name one example, was developed in Britain.

So it's immoral to dislike a political ideal that consistently bankrupts nations that devolves into totalitarianism? It's a bandaid to make short sighted fools feel good. You do know that socialism is basically a means of eliminating all competition with the exception of the government right? Works in small nations, not large ones. Money doesn't just come from nowhere, and no, just freeing the markets is stupid too.

Doesn't help that most "socialists" really mean "communism" these days. Why should I pay for your crap when I can barely afford my own?

What would single-payer (elimination of private insurance) do for pharmaceutical research? I'm not sure you understand the crux of the article.

Canada is looking into hiring a manufacturer to produce some of those off patent, low volume, but life saving drugs for Canadians that need them. Within the next 5 years there will only be a single entity purchasing drugs for consumption within Canada, giving huge power over what gets approved and how much will be paid for it.

What could happen under single payer is that governments could direct/fund companies for cures and then pharma would manufacture the product and distribute it under licence. If they balk at fees then the government yanks the licence and gets someone else to make it.

Quite frankly the Goldman Sachs analyst is the epitome of a sociopathic fanatic capitalist. Which is exactly what is wrong with the system.

So it's immoral to dislike a political ideal that consistently bankrupts nations that devolves into totalitarianism? It's a bandaid to make short sighted fools feel good. You do know that socialism is basically a means of eliminating all competition with the exception of the government right? Works in small nations, not large ones. Money doesn't just come from nowhere, and no, just freeing the markets is stupid too.

Doesn't help that most "socialists" really mean "communism" these days. Why should I pay for your crap when I can barely afford my own?

So it's immoral to dislike a political ideal that consistently bankrupts nations that devolves into totalitarianism? It's a bandaid to make short sighted fools feel good. You do know that socialism is basically a means of eliminating all competition with the exception of the government right? Works in small nations, not large ones. Money doesn't just come from nowhere, and no, just freeing the markets is stupid too.

Doesn't help that most "socialists" really mean "communism" these days. Why should I pay for your crap when I can barely afford my own?

I think this is one of the realities of the world. No shit sherlock is probably the most appropriate response to this article. While socializing biotechnology and medicine seems like a good idea, I don't know of any data about its track record of innovation and progress (though I'm happy to see any analysis folks can link to).

Still, I think Biden's idea of a cancer cure by using massive amounts of government money isn't a bad idea. It's similar to the space race. We went to the moon so we could flex our balls in front of Russia, not because we thought that we were going to turn a buck. Perhaps Nasa did it way more inefficiently than a private company could, but they did it and it achieved its desired effect.

There seems to be plenty of pharmaceutical innovation in nations with nationalized health care. Viagra, just to name one example, was developed in Britain.

pfft

Viagra was developed to be a hypertension drug. The side-effect was more profitable than the intent.

Not only are these two solutions exactly the same blindingly obvious idea but they're strategies that are already in use. If the extraordinary new sales technique of "sell stuff lots of people need" was working there wouldn't be an issue.

"Solution 3: Constant innovation and portfolio expansion: There are hundreds of inherited retinal diseases (genetics forms of blindness) … Pace of innovation will also play a role as future programs can offset the declining revenue trajectory of prior assets.""

This is not a solution. Having to constantly innovate and expand portfolios means significantly more volatility and thus increased risk for the company. You can't churn out a cure for a new disease one a year like they do with phones.

This is why free market ideology is garbage, and why the private sector alone is wholly insufficient to meet the needs of society. There is a necessary and proper role for government to provide public goods.

What GS said is true. However, the government should and must fund early or risky investments in technologies (which includes pharmaceuticals) that the private sector can't or won't.

One proposal I'm aware of is that the government should just outright buy the patent rights to certain important pharmaceuticals, and then provide it at a low or greatly reduced cost to everyone. Obviously you can't do that for every drug, but for ones like the one discussed by GS, the benefit-cost ratio in terms of public good could be very high indeed.